Throughout 2022, primary health care faced many challenges. Staffing shortages, high hospital costs, and the advancement of telemedicine forced health care organizations to rethink their strategic plan heading into 2023.
In this episode of Value-Based Care Insights, Daniel J. Marino is joined by Lucy Zielinski, Managing Partner at Lumina Health Partners. Dan and Lucy analyze health care trends in 2022 and take a peek into 2023.
Key points include:
Health care leaders have felt continued pressure on finances. With an unstable economy and high hospital costs, organizations need to focus on operational effectiveness, reducing clinical variation deduction, and revenue cycle management.
Staffing shortages were a major issue for hospitals in 2022, the trend is expected to continue. Health care organizations will need to center their attention on staffing recruitment and workforce well-being in 2023.
Effective service line development will allow physicians to deliver consistent, patient-centric care.
Daniel J. Marino
Managing Partner, Lumina Health Partners
Managing Partner, Lumina Health Partners
Daniel J. Marino: Welcome to Value-Based Care Insights. I'm your host, Daniel Marino. In today's episode, as we wrap up 2022 and prepare ourselves for 2023, we thought it would be good to spend a couple of minutes looking back on, on, on some of the successes and challenges we've had in 2022. But as health care leaders in our industry is preparing for 2023 to spend a couple of minutes talking about some of the strategies that we're seeing as we look back in 2022, I think it, it certainly continues to be interesting in health care. I think ever since the pandemic, health care has really gone through a lot of disruptive change. Some of it for the better, but a challenge and for many organizations, it's created quite a bit of challenge from a financial perspective, competition perspective, and thinking about how we wanted to restructure our business. As I kind of think through a few things and as organizations position themselves for 2023, we do have to leverage some of the good things that we've done, but also some of those challenges. With today's discussion, I'm very excited to have my colleague, Lucy Zielinski, managing partner of Lumina Health Partners, joining me today in the discussion. Lucy, welcome.
Lucy Zielinski: Thank you, Dan. Happy to be here.
Daniel J. Marino: As I think back, Lucy in 2022, it's been fascinating to watch how health care continues to evolve. I think some of those have occurred as a result of a lot of the economic financial pressures that we've had. So, for instance, wage inflation, overall inflation, and our economy has definitely impacted health care. We continue to see a lot of issues with the workforce, certainly in our nursing arena. But overall, just trying to recruit people into some key positions in health care has been a challenge. But more so I think than that, two other areas certainly resonate with me as, being really challenges to our provider community. One is the continued pressure on finances. Before the pandemic, as we've talked about, many hospitals struggled with their operating margins, either outbreak even or one, two, or 3% if they were lucky.
Now, as we see a lot of the past reports coming out or reports of the most activity over the last few months, the pressures, and financial pressures on hospitals and health systems are even greater. Many of them operating at a loss. But the other area that's fascinating to me is the fast movement of these non-traditional providers entering into the health care space, like the Amazons of the world being retail and so forth. So when you look and think about the activities that have happened in 2022, what have been a couple of those that have really resonated with you as being, let's say, big drivers of change?
Lucy Zielinski: Yeah, no doubt, Dan. It's been a tough year, I think for many health organizations, and health providers, and I think you hit it. One of the main challenges organizations have had is around their financial position. They're struggling, Dan, and I don't know that in 2023, it's going to be that much easier. As we saw for Medicare, that came out for the physician fee schedule, there's a reduction there the, in the conversion factor of about 4.5. We've been doing quite a bit of revenue cycle assessments for health care providers, and what we're learning is that there's, there are a lot of denials. I mean, denial rates are still very high. So there's an opportunity for health care organizations definitely to take a peek at those denials and see what's, what's really going on to find that opportunity for additional, additional revenue. I mean, some of the things we're finding are, you know, around authorization, accurate coding, even reimbursement is not accurate sometimes, um, based on the con contractual level. So I almost think there's an opportunity, for contract rate negotiation too.
Daniel J. Marino: Oh, I agree with you. I agree. As you think about the impact of the economy and some of the changes that have occurred in health care costs across the board are up anywhere between five to 10% within, hospitals, and medical groups. And it's not like they haven't done a good job of reducing costs because they have. Do you think that hospitals, health care leaders, do you think they're really given the attention to the revenue cycle activities as they should?
Lucy Zielinski: That's a great question. Some may be, but I am seeing many are not. You know, it's interesting, Dan, we've been doing revenue cycle for, for a few decades here now, and, um, we've had more revenue cycle engagements here in the past year than we've had in, in the last probably five to 10 years. Right. I think that's a key indicator, right?
Daniel J. Marino: Yeah, I agree with you. In some of the conversations that I've had with CFOs, many of them believe that the hospital revenue cycle is performing fairly adequately, but the physician side, the professional side of the revenue cycle, I think the one that is the area that's been lacking and it's been lacking for some time. I agree with you. I think there is a need to focus on improving the physician side of the revenue cycle, especially as you start to see the number of employed physicians continue to increase. And then alongside that, the professional side of managed care contracting has really not been given the attention that it should. Most of the time managed care leaders will give a little bit on the physician side in order to get the higher reimbursement, maybe on the hospital side.
So to think about it in its entirety longitudinally, from a negotiation standpoint, I really do believe that that's an opportunity as well. So when we think about 2023, in my mind, there are five strategies that are really resonating as areas that health care leaders really need to pay attention to. So I'm gonna read those off real quick and I'm going to ask you for your opinion on some of these and your responses to them. So the first one is the continued evolution of primary care. As we know, there are a lot of non-traditional health care providers that are coming into the market, but more than that, patients, our consumers, and their needs have been changing related to primary care. And I think we're gonna continue to see primary care evolve. Number two, alongside with that, as I mentioned, a lot of non-traditional providers are entering into the health care space, uh, technology vendors, a lot of retail vendors, the Amazons, the Googles of the world, certainly going to continue to impact health care moving forward.
Number three, you mentioned some of this are reimbursement, growth, and Medicare Advantage, risk-based contracts are going to be even more prevalent in 2023 than we've seen in 2022 and even prior to that, four is the workforce. And it's not only recruiting the right level of staff that I feel is going to be important, but it's improving what I would call workforce wellbeing. And it's for the clinical staff, the non-clinical staff, as well as the physicians. And number five is the continued financial improvement that has to occur. And it's not going to come from cutting staff, but it's gonna come through operational effectiveness. It's going to occur through reducing clinical variation reduction, as you mentioned, a continued focus on the revenue cycle of those five. Any thoughts, comments, any ideas come to mind as you, as you think about some of the conversations you've had with some of your health care leaders around the country?
Lucy Zielinski: Yeah, I would probably say the fourth one, workforce seems to come up quite a bit. As we've done surveys with our strategy work, every single time we survey providers, what is their pain point? The workforce seems to come to the top of the list. And like you mentioned, Dan, it's not only the physician, the providers, the clinical providers, but it's really the entire workforce, the staff as well. There's a lot of competition with other companies out there, non-healthcare companies that are competing in this space. I mean, I was out on the west coast not too long ago, and there was a sign on the window of a fast food restaurant. I think it was $24.
Daniel J. Marino: Wow. <laugh>.
Lucy Zielinski: Some of the other large retail vendors, the large ones we all know of, they're offering very, very high wages compared to some of our workforce in health care. Right?
Daniel J. Marino: Right.
Lucy Zielinski: So health care providers now have to compete with those rates
Daniel J. Marino: Right. How do hospitals compete with that? I think that's some of the challenges that we see. If you're just tuning in, I'm Daniel Marino and you're listening to Value-Based Care Insights. I'm here talking to Lucy Zielinski. We're spending some time discussing some of the key strategies that are going to be important to health care providers in 2023. Lucy, I want to dive into a little bit more of the workforce. When you think about these changes, some of the wage activities, there are still a lot of reasons why our health care colleagues are looking to get out of health care. I think one is the burnout factor. I think that's still occurring. Probably the after-effects of the pandemic. Certainly, I think that's, that's one area. I think the other is this whole working at-home work-life balance, I think is, is a second area. But a third that I'd love to get your opinion on is sort of feel like the leadership requirements within health care has changed and it's going to continue to change. In your opinion, how is leadership development important in improving the overall well-being of our workforce?
Lucy Zielinski: Yeah, Dan, I think health care organizations have to think differently, have to lead differently, have to act differently than they have in your past. It's a very competitive environment, like you talked about, not only with some of the retail outlets that are out there but with virtual care, with technology and AI and <laugh> robotics and all kinds of wearables. I mean, there's, there's so much competition that we're seeing. So I think what leaders, um, need to do is ask themselves what the question is, what, what skills do I personally need to succeed, um, to pivot the organization? And then how do I engage my workforce? How do I engage my workforce to the point where they feel like there's a reason they're coming to work? They're, you know, the satisfaction surveys are, are, are not as important today as they were before. Right?
Now it's more around when we're doing these engagement surveys now staff want to be seen, heard, and really valued for the work that they're doing. Yeah. We recently did a survey of a large physician group, and when we shared the results with them, what they realized is that they weren't connecting anymore. Right. And one of the ideas that they had was just to come around the table in Hampton dinner again together and just to build relationships because they're all going through a very stressful time. And sometimes when you gather around in a social kind of casual environment, not only you're able to relate, but there are ideas that come out of it.
Daniel J. Marino: Yeah.
Lucy Zielinski: And people like that.
Daniel J. Marino: People like that. Well, and they wanna be heard as you said, they wanna be engaged, and we have to think about doing things definitely differently. I'm going to jump on one of these other topics that I sort of near and dear to my heart. And that's the evolution of primary care, let's say, as a service line, thinking about it differently, but also the expansion of other service lines. Cardiovascular services, maybe neurosciences, orthopedics. We're seeing more and more hospitals, health systems focusing on creating more comprehensive service lines. In your opinion, how are, what, what are some of the value drivers there? Why do you feel like at this point in time, moving into that level of, of service line growth is important?
Lucy Zielinski: Well, I think the first thing that comes to mind is the fierce competition. I think of primary care. We talked about that. In order to kind of maintain that market share and keep the network with the patients who are in the community, I think every single health care system needs to think about it having a strong primary care strategy.
Daniel J. Marino: Yeah. I agree. And primary care has changed so much in the last three years. You're gonna have the non-traditional or the traditional primary care, right? Patients are going to still want to call and make an appointment with their primary care physician, and have that conversation. But more and more patients want convenience based on their primary care services. If they're sick, they wanna get that support now, right? They don't wanna wait 24 or 48 hours to get in and make an appointment. So they want convenience, they want quick access to some level of services and almost a level of immediate need of immediate support provided to them so they can sort of move on to their day. So it, it's interesting to see how primary care has evolved.
Lucy Zielinski: Dan, I was reading something the other day, and some of these retail clinics don't even require appointments. I mean, that is the level of service I think we as consumers are expecting, especially I think the younger population.
Daniel J. Marino: Right, from a value-based care perspective, if you have the retail clinics, you know, the Walgreens, Amazon's coming in, they're gonna be focusing, focusing on the younger population that isn’t as complex or doesn't have complicated needs as some of the older population. So the cost differential is going to be less, maybe the margins aren't as high, but, I think if we as health care providers don't focus our strategy on how we're going to take care of these patients, we run the risk of really isolating this group and they're going to get their services from somebody else. In my mind, I believe it's all about convenience.
The other area that I wanna focus on a little bit is the growth of some of these other clinical service lines. There's a lot of private equity money, venture capitalist money going into some of the service line growth, cardiovascular services, and some of this I think is due to the response and service shifts from the hospital acute setting, or to the ambulatory setting, and so forth. Is anything resonating with you there on the advancement in some of these clinical service lines? Any ideas or advice on where some of the health care providers should really give some thought as they start to think about growing some of their service lines?
Lucy Zielinski: I think the first step is to take a look at what you have and be really good at what you have. So rather than being good at everything and every single service line, sometimes it's not possible, especially for some of these smaller, you know, community hospitals or rural health, even the larger ones stand. So figure out what you're really good at. And if it's orthopedics, then robotics, what's the latest and greatest and be really good at, with some good quality scores and just that good reputation in the community.
Daniel J. Marino: Right. Well, you bring up a good point. In one of our previous episodes we had a CEO from a rural health provider on, and boy, one of the big pieces of advice that he gave is, you can't be everything to everyone. You wanna focus on the one or two things that you really wanna be good at, put your resources there. And I just thought that was just spot on. Great advice, because many of our providers are, you know, they're trying to provide everything to everybody, right? Take care of all the needs in, in the community. And although that's important, there are different ways that you can focus on that, but really to pay attention and, and build those services that you're really gonna be good at. I think that's key.
Lucy Zielinski: Yeah. If I have a situation that requires a neurologist, I'm willing to drive a little further to get the best of the best rather than somebody in my community who can be older. So that's a face in point, I think we're looking for. There's a lot of data now where we can evaluate providers based on quality. People are looking at the five-star program. People are looking at, you know, leapfrog as some of the other health grades and even the comments.
Daniel J. Marino: You know, we continue to use the internet for more and more knowledge, more and more insights, more and more understanding of, uh, of where we want to get our services from. Well, Lucy, this has been great. You know, as we enter into 2023, any advice from our listeners, anything that might be able to offer any insights that would really help guide them as they move into this new year?
Lucy Zielinski: Yeah, I think of four things just to focus on, take a look at your strategy, brush it off, and create something new moving forward. Ask some key critical questions. I think the second is leadership, do you have the right leaders? I recently wrote an article about dyads and are you working together with your physician partners? The next one would be around the financial performance and assessing that revenue cycle. Pretty simple. Just do a high-level review of that rev cycle. And then I think, um, around workforces is the engagement piece. Focus on employee engagement, consider doing a survey and evaluating how engaged your workforce is.
Daniel J. Marino: Yeah, I agree. All great advice. And I think if health care leaders can incorporate a lot of that into their strategy and their operating plans into 2023, that's what's gonna continue to position themselves to provide the quality and to support their patience that, that they need to. Well, Lucy, thanks for, for joining us today. I really, I really appreciate it. Before we wrap up though, I want to spend a couple of minutes responding to a few questions that I've had from, some of the audience, and some of our listeners. We've been doing our podcast for, gosh, about three and a half years now, and it's really done well. And the purpose of our podcast is really to share insights, to educate to bring some interesting topics, and so forth from, industry experts, across the country that we could share with all of you.
But through some of the conversations that I've had a few folks have asked me, well, how did I get into this? So I thought I'd spend just a minute or so kind of giving you a little bit of background. Both Lucy and I as well, as some of our other colleagues are part of Lumina Health Partners. We are an advisory firm providing support to the provider community. We pretty much provide a lot of work around strategy, but as you would guess, we also get into a lot of the operational activities around managed care, contracting, lot around revenue cycle. We've done some work around improving financial performance, particularly on the medical group side. One of the things that I would offer to our listeners is on our website, we have a tremendous amount of resources.
Not only do we have a list of all of our podcasts, but both Lucy and I, as well as a number of our colleagues, we've written a large number of articles and blogs, and we have a lot of tools and so forth, all in the name of providing some great support, great insights to our colleagues in health care. So that website address is luminahp.com. If you hit on the insights page, you'll see all of our information there. Please take a couple of minutes, to look at that. And lastly, before I wrap up, I would love to hear from any and all of you. If you have some ideas that you'd love to share or some great, stories that you'd love to tell and possibly become a guest on our podcast, we'd love to hear from you. Please feel free to reach out even just to say hi. My email address is email@example.com. As always, I want to thank everybody for listening today and hope you have a fantastic end to 2022. And I wish you all the best of luck as you enter into 2023 until the next insight, I'm Daniel Marino, bringing you 30 minutes of value to your day. Take care.
About Value-Based Care Insights Podcast
Value-Based Care Insights is a podcast that explores how to optimize the performance of programs to meet the demands of an increasingly value-based care payment environment. Hosted by Daniel J. Marino, the VBCI podcast highlights recognized experts in the field and within Lumina Health Partners